PAOLA — The county could save more than $1.2 million by refinancing a portion of its outstanding 2014 and 2015 revenue bonds used for the construction of the jail and law enforcement center.
County commissioners, sitting as the county’s Public Building Commission (PBC), authorized the county’s financial advisor and bond attorney to begin work on the refinance project.
Financial advisor Greg Vahrenberg of Raymond James discussed with commissioners on Wednesday, Dec. 8, a plan that would lower the bonds’ interest rates but also accelerate the repayment of those bonds.
“The opportunity that we have identified would refinance a portion of the 2014 bonds and a portion of the 2015 bonds,” Vahrenberg said. “Those bonds have an average interest rate of 3.24 percent, and based upon current interest rates we would expect the new interest rate would be 1.73 percent.”
The result would be a savings of nearly $1.27 million, he said.
Vahrenberg said an added benefit of refinancing is shortening the repayment schedule by 11 years — from 2040 to 2029.
“This savings, combined with the savings we captured about two years ago on refinancing a separate portion of the outstanding bonds, we believe will put you in a position to repay the outstanding bonds several years in advance,” he said.
The bond debt for the construction project was secured by a quarter-cent sales tax approved by voters. Once all of the bonds are paid off, the quarter-cent sales tax for the jail/law enforcement center would end, Vahrenberg said.
Once work on the bond refinancing is complete, Vahrenberg said he would bring back a resolution for the PBC’s consideration that would contain the actual new interest rates, the exact savings and final repayment schedule.
Commissioners liked not only the lowering of the interest rate but the advancement of the repayment schedule.
“The sooner we can pay it off, the sooner we can retire that quarter-cent sales tax,” Commissioner Rob Roberts said.